Compaq Retracts Notification Of Charges
(11/25/99, 7:13 a.m. ET)
By Paul McDougall, InformationWeek
According to documents filed with the Securities and
Exchange Commission, Compaq's efforts to transition
customers off its Windows NT/Alpha platform will
cost the company between $50 million and $100
million in the company's upcoming fourth quarter
and an additional $100 million to $150 million in the
first quarter of 2000.
On Tuesday, a Compaq spokesman confirmed the
financial hit would show up as charges against earnings in
both quarters. However, Compaq retracted that information
Wednesday. The company now maintains the program
will be covered under normal operating costs, "though it
could still have an impact on earnings," said spokesman
Jim Finlaw.
According to the company's 10-Q report for the third
quarter, the costs will be incurred because a previously
announced plan to discontinue offering Windows NT on its
Alpha processor-based servers and workstations. Under
that plan, customers who have purchased an NT/Alpha
server or workstation will be given up to 90 percent credit
toward a new Intel/NT system. Customers choosing to
remain on Alpha will be offered a free upgrade to an Open
VMS, Tru64 Unix, or Linux system.
Compaq made no mention of the impending costs in an
interim 8-K form filed with the SEC immediately after the
close of the company's third quarter Oct. 26. However,
SEC rules permit companies to file their full quarterly
report--in a document known as a 10-Q--up to 45 days
after the close of the quarter. Compaq's third-quarter 10-Q
is dated Nov. 15.
The company did make reference to the impending
fourth-quarter costs during its third-quarter earnings call.
However, it made no mention of the additional costs that
will be incurred in the first quarter of next year.
Compaq says the final cost of the program will be
determined by how many customers take advantage of
the transition program. The company could not
immediately say how many customers are eligible to do
so.
¨
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